A Sensitivity Research on SME Growth and Cash Flow from Financing Activities

The present paper, whose research object is the small and medium-sized manufacturers in SME board of Shenzhen security market from 2006 to 2008, examines the relationship between SME growth and cash flow form financing activities. The cash flow from internal financing activities is accounted on the cash basis, while cash flow from other financing tools is accounted on the traditional accrual basis and in a dynamic way that the initial value is subtracted from the ending value. And the regression result shows that the cash flow from financing activities is highly related to SME growth and that the cash flow from equity financing and the cash flow from the long-term loan financing are not remarkably related to SME growth. It is found that, in terms of enterprise growth, the conclusion drawn from the perspective of cash flow, is widely different from the traditional conclusion on the preference for equity financing from the traditional perspective of financing amount. It proves the facts that the capital market in China is still developing and not mature, and there is strong constraint on SME external financing.